...
class ContentTitle extends RulesActionBase {

  protected function doExecute(EntityInterface $entity) {

    $entity_id = $entity->id(); // Getting dynamic entity ID
    $controller = Drupal::entityManager()->getStorage('node');
    $node = $controller->load($entity_id);

    $title = $entity->label();
    $item = $node->get('field_xyz')->value;
    $new_title = "Title is " . $title . $item;

    Drupal::logger('custom_rules')->notice('new_title: ' . $new_title);

    $data = array(
      'type' => 'custom_content',
      'title' => [
        'value' => $new_title,
      ]
    );
    $node = Drupal::entityManager()
      ->getStorage('node')
      ->create($data);
    $node->save();
  }
}

use DrupalnodeEntityNode;

class ContentTitle extends RulesActionBase {

  protected function doExecute(EntityInterface $entity) {
    $entity_id = $entity->id(); // Getting dynamic entity ID
    $controller = Drupal::entityManager()->getStorage('node');
    $node = $controller->load($entity_id);
    $title = $entity->label();
    $item = $node->get('field_xyz')->value;
    $new_title = "Title is " . $title . $item;
    Drupal::logger('custom_rules')->notice('new_title: ' . $new_title);
    $node = Node::create([
      'type' => 'content_type',
      'title' => $new_title,
    ]);
    $node->save();
  }
}

$node->set('title', $new_title);
$node->save();